I’m not sure how many of you read the story the other day about Trade Me supposedly getting into the business of sharetrading/capital raising.

To recap: the story in NBR said Trade Me, New Zealand’s largest website, was looking at setting up a platform to trade shares. The idea is that rules would be relaxed and sums of up to $20,000 could be spent with a buyer-beware clause, before stricter rules on capital raising applied. It went onto say that TradeMe was talking to the government, and that PM Clark and Finance Minister Cullen were reportedly “positive” on the idea.

Well from what I can see the story is an extrapolation of an idea expressed by two businessmen unrelated with Trade Me. This idea has been turned into a story far bigger than it really is – which is lucky as it should help kill the thought.

I wouldn’t be surprised if Trade Me had looked at this area from time to time, but it seems their focus is in other markets such as property.

For the government to be keen is highly unlikely after it seriously considered closing down the unregulated trading platform Unlisted.

Just image the stink NZX would put up against Trade Me if its efforts with the much smaller Unlisted are anything to go by.

From an investors’ point of view it is a daft idea. All it would do is make a big pool for sharks to feed in.

If you could raise capital as easily as putting an offer on TradeMe then you would undoubtedly see the gullible public being taken for a ride. People try to do it in the current environment which has tougher rules.

A classic case is one where a company tries to raise money from the public with an IPO over hyping the value of its assets, growth plans and earnings potential.

The offer fails – with a little help from the regulators. The business carries on for a year or so, and when things start going wrong the assets are sold to another company at prices lower than the values stated in the prospectus.

The original company collapses and creditors are lucky to get a little of what they are owed back as all the assets have gone. Normally IRD is one of the creditors. So in this case the public stands to lose either at the start with an IPO which if it got off the ground wouldn’t deliver. And at the end the public loses out as IRD is a creditor.

There is only one winner and it’s not the investing public.

Ouch….The NZ Superannuation Fund has hurt AMP Capital again.

The story today about AMP’s CIO Tore Hayward leaving to join his predecessor Paul Dyer at the NZ Superannuation Fund reinforces a couple of things.

Investment management is about people above all else.

Often people are distracted by things like numbers and performance. But it is people at the end of the day which deliver the results.

The people in the investment management side of the industry also tend to display team characteristics. Dyer and Hayward have worked together before and it is my assumption that they got on well as a team and are happy to again be working together again.

(This team thing seems to be a strong characteristic in the funds management game. My other recent piece of evidence for this observation is the defection of all Colonial First State’s property management team to a competitor).

When key people change there can be a major impact of the fund(s) they are involved with.

Managers know this. That is why they stick so much spin on the departure of key people. The standard line is that it’s a team thing at their firm these days and there are lots of disciplines and processes, so it’s just a matter of the next person stepping up to the plate.

A bit like cannon fodder.

I am starting to question some of these comments now, for the simple reason I have seen evidence (not with regards to Hayward’s departure) that suggests these people stepping up to the plate have not actually got the depth of experience suggested in the spin.
Like it or not there are stars in this game and they are hard to replace.

While the official comments are comforting to customers, the real thing which is needed is evidence that the firm/fund can still perform.
In AMP Capital’s case it is fair to observe it probably has the size and depth to cover the departure of its CIO – but that’s not a chair anyone would want to leave vacant for long.

On a far more distressing note, AMP Capital normally holds a media lunch after the end of each quarter (which is always worth attending) led by the CIO. Will there be a lunch this month? If so, who will front it? It would be terrible miss a free feed!

As this year is likely to be a big one for the savings industry it seems appropriate to start with a Blog the subject. The reasons I suggest savings will be a theme of the year is that KiwiSaver is likely to be properly born, as being more a twinkle in the eye as it is at the moment, tax issues will be centre stage as will regulation of the sector.

One of the arguments I’m often reluctant to be drawn too deeply into is household savings rates. The reason for my reticence is that it is one of those subjects you can argue with a raft of data and prove both sides of the argument.

While reluctant to bat for one side or another my inclination is that generally we, as individuals, are doing OK. On this basis I tend to side with the two protagonists of this moot – self-appointed superannuation guru Michael Littlewood and Treasury’s Grant Scobie.

I understand the arguments from economists about household savings rates, but these often seem to be big picture economic arguments as opposed to something which is at an individual level.

One of the reasons I tend to think we are saving sufficient for our own personal needs is that I find it difficult to believe that people approach retirement – and the prospect of several decades of retirement – totally unprepared. Kiwis are a pragmatic bunch of people and the concept of not getting things sorted seems out of kilter with our culture.

In saying that I believe that many people will not be as well off as they expect and will fall into what I call the comfortably poor category. But with their state pension, a freehold house and a little bit of savings they will be ok.

The reason for penning this Blog is that a recent one of the Herald’s Summer Surveys tends to support my argument. It showed that people’s debt levels weren’t as high as some suggest and that people are pretty relaxed about their financial situation.

The poll shows 40% of those surveyed have no borrowings and another 40% plus owe less than $200,000. Most of these two groups (72.5%) have no financial worry.

In terms of net wealth, more than one third (34 per cent) have total assets of more than $400,000 and around the same number say they are worth between $100-400,000.

While 80% of the population look to be in OK financial shape (probably not ideal physical shape after the holidays) it leaves the other 20% which I suspect are getting into deep trouble. More on this in an upcoming Blog on debt.